The dollar rallied to fresh 11-month highs against the euro and to 8-month highs against the Japanese yen, as Fed Chair Janet Yellen reaffirmed the widely held belief that US interest rates would gradually rise during 2015.

In contrast, the Bank of Japan seems to be on hold for the foreseeable future, while the European Central Bank stood ready for additional easing in order to ensure “price stability” according to the ECB chief. Lower-than-expected inflation has been a problem that has dogged the ECB.

Both Yellen and Draghi were speaking at an annual gathering of central bankers at Jackson Hole, Wyoming. The picture provided by the two policymakers contained a stark contrast; on the one hand a US economy that was on the mend and on the other hand a Eurozone economy that possibly needed additional monetary stimulus.

The euro dropped below 1.32 to trade as low as 1.3185 against the dollar; its lowest since September of 2013. The psychologically important level of 1.30 is now increasingly in the market’s sights. The dollar also gained versus the Japanese yen to trade at 104.25, possibly eyeing the year’s high at 105.43 made in early January 2014.

Geopolitical concerns were also an important theme for the market before tomorrow’s meeting between the leaders of Ukraine and Russia. Expectations were low for the outcome of the meeting although that did not hurt risk sentiment much with the S&P 500 trading near its all-time highs. Gold was challenging its 2-month low around 1275 dollars an ounce.

Looking ahead for the remainder of the day, the German IFO business climate for August was due for release as well as US New Home Sales for July and Markit Services index for August.